Why Niva Bupa is hit by GST cut on individual health cover

Niva Bupa Health Insurance Co. Ltd faces Hobson's choice after the goods and services tax (GST) rate changes on insurance: to remain competitive without raising premiums and sacrifice profit margin, or become uncompetitive by raising premiums and protect profit margin.

- Manish Joshi

Before delving into why Niva is the casualty of GST rate cuts, it is important to understand a few points. Only individual health insurance (not group health) has been exempted from GST, with other types of insurance like vehicle insurance remaining taxable. So, general insurers will still be able to offset the GST on commission paid to agents and other expenses for individual health insurance policies against their GST liability on premium collected on all other general insurance policies. This is called the input tax credit (ITC).